By Collin Eaton

The Trump administration is wading into a long-running dispute between its allies in the oil patch and six Central African countries that could derail fossil-fuel projects valued at more than $130 billion.

Officials from the U.S. Treasury and State departments are pushing the countries to resolve a disagreement over the remediation funds owed by Chevron, ConocoPhillips and other oil companies. Such funds are used for future environmental cleanup at exploration sites.

An organization of Central African countries -- including Cameroon, Equatorial Guinea and Gabon -- has long signaled it wants the oil companies to park those funds at the Bank of Central African States, also known as BEAC, to shore up its depleted foreign-currency reserves. Some African officials initially suggested that the companies would be required to deposit as much as $10 billion.

The oil companies say that is a risky proposition that doesn't adhere to international best practices. Remediation funds are usually treated as untouchable and held at U.S. or European banks. The companies want to ensure BEAC can't access the remediation funds for other purposes and peg the sum they would owe at closer to $1 billion over a 10-year period.

Negotiations have been under way since 2018 but became more urgent when the central bank gave the companies an April 30 deadline to begin depositing the funds. That is when the Trump administration stepped in.

Although the first few months of President Trump's second term have largely frustrated American oil producers, many executives say his administration remains an influential ally in their international affairs.

In this case, the U.S. Chamber of Commerce , which has acted as an intermediary between the African countries and the oil companies, helped bring the dispute to U.S. officials.

Representatives from the U.S. State and Treasury departments warned African officials in a meeting in Washington in late April that they would be watching the outcome of the negotiations closely, according to people familiar with the matter. It was the first time U.S. officials had intervened directly in the meetings between the companies and government ministers.

The U.S. doesn't have jurisdiction over the issue but carries weight at the International Monetary Fund, which lends billions of dollars a year to African countries. In March, Rep. Bill Huizenga (R., Mich.) introduced a bill to withhold U.S. support for any IMF action related to the six countries until the matter was resolved.

The IMF acknowledged recently, after long deferring on the matter, that the countries couldn't count the remediation funds among their currency reserves under its rules. A spokesman for the IMF said it has been encouraging the parties to come to an agreement.

Some of the oil companies are considering pulling out of projects or delaying new investments in the region unless they can reach a deal, according to people familiar with their thinking.

All together, the projects at risk are expected to produce more than 1 billion barrels of oil and gas over the next 25 years, according to S&P Global. They are worth a combined $133 billion in government revenue and company cash flow. Energy companies typically share profits and pay royalties and taxes to local governments after they begin pumping oil.

Chevron, for example, has an exploration project in Cameroon that has yet to start up. It also operates offshore fields in Equatorial Guinea, a region Exxon Mobil exited from last year.

A recent drop in oil prices is forcing the companies to be choosy about which projects they advance. Any new projects in the six countries would have to compete for investments against areas such as Guyana in South America and Angola on the western coast of southern Africa, where the oil companies are eager to shift more capital.

"The countries will lose out the most if they overplay their hand here," said Caleb Jasso, senior policy adviser at the Institute for Energy Research. For the oil companies, "there are plenty of other places to park capital," he said. "The companies can take a temporary loss and simply reallocate and strategize, and go elsewhere."

For now, BEAC has agreed to be a passive custodian of the funds -- which would only be deposited if a deal is struck -- and not to impose fines while the parties continue negotiations. A long-term solution remains elusive. The central bank didn't respond to requests for comment.

Trump's return to office hasn't yet spurred the golden age of oil and gas that he promised. Since his tariff blitz in early April, the price of crude has fallen 15% to $60.89, a level that shale companies say is untenable for domestic production growth and is cutting into their earnings. Privately, oil executives have complained about the administration's fixation on dropping fuel prices. Some are already cutting spending.

Yet in other matters, Trump has shown that he has the industry's back. He exempted oil, natural gas and refined products from the raft of tariffs that are currently paused until July 31. The administration also reduced tariffs earlier this year on Canadian crude after a meeting with oil lobbyists.

Write to Collin Eaton at collin.eaton@wsj.com

(END) Dow Jones Newswires

May 28, 2025 10:00 ET (14:00 GMT)

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